What is Alternative Business Lending?
Alternative lenders are the alternative to bank lending. Alternative lending companies are at the forefront of providing businesses with alternative finance options when banks can't provide traditional funding. Alternative business lending options are available to secure businesses' credit in numerous forms, including small business loans (term loans), equipment financing, asset-based lending, invoice factoring, and merchant cash advances, among others.
As a leading alternative business financing company, AdvancePoint Capital has assisted companies of all sizes and in most industries to obtain the financing their enterprise requires to thrive by offering one or more of these financing options. Essentially, we’re in the game of turning the seemingly impossible into the possible. Alternative lenders typically offer a wide range of alternative lending options that businesses can take advantage of to acquire working capital.
Advancepoint Capital has a marketplace of many alternative business lenders that can fit specifically into your current working capital needs.
Alternative Business Lending vs. Traditional Business Lending
As many business owners have experienced, getting traditional bank loans (term loans) from traditional lenders such as a bank or credit unions for small businesses is a challenge. The good news is there are alternative business lenders that have products that traditional lenders such as banks or credit unions don't have.
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AdvancePoint Capital makes the loan application process a simple, straightforward experience.
Features and Benefits of Alternative Business Financing
- A Variety of business financing products
- Application process that is fast and simple compared to a bank
- Reduced documentation requirements
- Considers a variety of qualifications whether it's credit and/or documentation limitations
- Low annual revenue requirements
- Many alternative lenders in the network
How Does Alternative Business Lending Work?
Business loan originators such as business loan brokers and online lenders have a variety of alternative s to your traditional business loan or line of credit.
Financing a small business venture is often easier said than done. The red tape that must be negotiated with a traditional lender before funding is approved often feels insurmountable. Even an established business has to jump through hurdles for funding approval from business lenders that can delay the start of a new project.
The reality is that we live in a world where time is of the utmost essence. Information is more than readily available and the race is on like never before for true innovation. You simply don’t have the time to be sitting around waiting for finance to come through while your competition soars ahead of the flock.
It is the aim of alternative lenders for small businesses to remove the stopping blocks to entrepreneurial flow by bringing funding options and businesses into alignment with one another. What’s more, we do it in a way that doesn’t discriminate, welcoming applications from small businesses with a range of credit histories.
6 Best Alternative Business Financing Options (October 2023)
We have put together the most popular alternatives to traditional business loans that can cater to a variety of business owners qualifications and needs.
Small Business Loans
Small Business loans are the most common business financing product requested because of the attractive terms. These short-term loans, which function like installment loans, come with interest rates and fixed terms that are affordable. A small business loan may not be as easy to get approved for as other alternatives as there are minimum credit score requirements and minimum annual revenue.
Business Line of Credit
A line of credit is a credit line that is revolving with the ability to draw funds up to a credit limit. You only pay interest on the outstanding balance with lines of credit. Business lines of credit require a certain amount of annual revenue, a good personal credit score, and financial health to acquire. Lines of credit are typically up for renewal annually.
Invoice Financing
Invoice factoring, also known as invoice financing, is a form of accounts receivable financing that allows businesses who invoice clients with up to net 60 terms of their unpaid invoices. The advance of the invoice before there paid helps businesses that need to improve the rate of flow of cash flow for a nominal fee. The credit score of the business owner is not a factor.
Merchant Cash Advance
Merchant cash advances are advance of money to the business that is repaid based on future sales of the business. Merchant cash advances can be a great option when traditional loan options are not available due to credit score or some other reason. Credit standards are lower because repayment is a set percentage of future sales until paid back in full.
Business Credit Cards
Yes, business credit cards are an alternative lending option. In fact it may be the most common alternative business loan product used by small businesses. Credit cards are a form of lines of credit that are revolving with flexible repayment and are great for quick purchases and business expenses.
Equipment Financing
Some equipment can be very expensive for some businesses and equipment financing is a must because it provides longer terms with affordable payments as it uses the collateral of the equipment as security. Equipment loans or leases are available with monthly payments.
Why do You Need an Alternative Business Loan?
In our experience, we have found that a common thread among most of our clients is their need to obtain business financing as quickly as possible. As a result, we have found that they seek alternative lenders out for one of the following reasons:
- They do not qualify for business funding from traditional banks. Business owners will have approached a traditional financing institution, such as their bank, only to find that their small enterprise does not qualify for funding. This is frustrating and can result in the stalling of a business’s journey from concept to actualization. Time and again, we have found that before throwing in the towel, they turn to us for more flexible funding options that serve the needs of their business.
- They need immediate cash flow. The timeline between application and the bank’s financing decision does not mesh with their firm’s almost immediate need for cash. Instead, AdvancePoint Capital provides business alternative lending often at the speed that your business, well, does business.
- They have bad credit. We will not decline your application based on a negative personal credit score like traditional lending would. We consider clients with a range of ratings, from outstanding to poor. We don’t believe a negative credit report should prevent you from financing a future opportunity.
Pros and cons of Alternative Business Lending: Is Alternative Business Lending Right for my Business?
Pro's
- Higher approval rates than traditional financing
- Streamlined application process
- Flexibility with more products and features
Con's
- Higher interest rates
- Repayment Terms can be shorter than traditional financing
- Placing debt on the business
- Increases expenses with debt payments
How to Acquire Alternative Business Financing Quickly?
The entire alternative financing process—from application to funding—can take less than one business day with alternative lenders. That means that in less time than it takes you to come up with loans application and required documents, you can expect an offer in hours. While banks require extensive paperwork and personal financial records to be submitted, online lenders have a simple online application process. Alternative lending only requires one page application form that is easy to fill out and submit, and there is no need for an in-person consultation.
All you need to provide alternative business lenders are:
- A simple one-page application document, to be accessed through our website
- Active business bank account-Business Bank Statements so that we can assess both the needs and viability of your business.
- Proof that you have been in business for a minimum of 6 months. (Please note that we do not accept startups.)
We need minimal paperwork, and you’ll have your alternative business financing decision within hours. If accepted, your money is immediately available and repayment terms are flexible. That means you can focus on the implementation of your next big idea, rather than worry where the next bout of alternative funding will come from. As a result, you can get in step with the needs of your business as soon as possible. We’ll serve you so that you can better serve your clients.
In return, we require that repayments are made over a period of 12 months or less. Interest rates are dependent on your gross sales.
What is an alternative lender?: Types of Lenders
An alternative lender is an entity that provides alternatives to traditional bank and credit union loans and lines of credit.
- Business Loan Broker
- Online Business Lender
- Market place or Loan Comparison Service
- Small Business Lenders
- Merchant Cash Advance Funders
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Frequently Asked Questions
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We got into the business of alternative financial services because we believe in the long term potential of small business owners to drive the economy, create jobs, and provide needed services. If we can work toward making that happen through convenient alternative loans, we will be able to make strides toward the kind of thriving economic environment that benefits all tiers of society.
If your bank or traditional lenders have not offered your business the financing options and timeline your enterprise requires, contact AdvancePoint Capital today for alternative lending solutions. We want to help you grow your business and will work hard to help you obtain the financing your company depends on. Just fill out and submit our form, or give us a call at (855) 635-3936. Our representatives are available 24/7 to assist you. Call today!
